At The Precipice

We stand at a defining point for health care in America. What is our next best step? Overwhelmingly, people believe that fixing the Affordable Care Act is the better way to proceed when compared with repealing and replacing a law that has already helped over 20 million Americans.

Although the Republican establishment seems fixated on repeal, Americans do not want this outcome. Instead, they want bipartisanship to return to Congress and improvements made to Obamacare.

How can we make that happen?

Senate Republicans should postpone their quest to fundamentally change Medicaid, engage in an intellectual dialogue with Democrats, and focus on one thing – improving the Obamacare markets.

Now is not the time to repeal and replace the individual mandate. That piece of the policy puzzle should be revisited at a later time.

Congress can improve coverage, stabilize the health insurance market, and still reduce the burden of excessive insurance regulations, mandates, and taxes.

First, the Administration must signal its willingness to continue cost sharing reduction payments that help Americans afford deductibles and copays. Congress must appropriate the funds. And it would be even better if these funds were available up and down the full income spectrum up to 400% of the federal poverty level which amounts to just under $100,000 for a family of four.

Second, the Senate’s plan to provide subsidies to Americans under the poverty line would be a great option for closing the so-called Medicaid Gap. The Medicaid Gap exists in states that have yet to expand their programs under the Affordable Care Act and where individuals earning less than $12,060 cannot receive subsides to purchase their own private insurance. Federal matching rates for states that expanded should be blended to a cost-neutral average for the traditional and expansion populations thus allowing states to continue drawing down the same amount of total federal funding but requiring them to share in the cost of each additional enrollee.

Third, Congress should fix the family glitch, an error in the Affordable Care Act that prohibits a family from accessing marketplace subsidies if coverage is deemed affordable for the breadwinner yet unaffordable for the entire family’s insurance plan. Simply by changing how “affordability” is calculated, millions of American families could receive financial relief and improved coverage options.

Fourth, to improve participation in the marketplaces, any insurance companies wanting to sell Medicare Advantage or Medicaid managed care plans should be required to offer an Obamacare marketplace plan as well. This would improve competition in places where insurance options are dwindling.

Fifth, insurance companies should be allowed to charge a 4:1 ratio for the oldest versus the youngest enrollees. This ratio more accurately reflects healthcare costs at these extremes of age compared to the Affordable Care Act’s current 3:1 ratio.

Sixth, several taxes – almost all of which are passed on to patients – could be eliminated. Congress can repeal the prescription drug tax, the health insurance company tax, and the medical device tax without harming the overall healthcare system.

Seventh, the employer mandate is not completely necessary. This provision requires employers with more than 50 employees to offer insurance coverage or pay a fine. At the margin, some employers choose not to hire additional workers in order to avoid that mandate, leading to approximately 250,000 fewer jobs. On the other hand, eliminating the mandate would lead to 500,000 people losing employer insurance.  On net, a small number of people might loose employer coverage, but this should be contrasted with the numbers of people who would get new jobs and the ability of those employees to buy their own private coverage in the Obamacare marketplace.

Lastly, because Republican plans will likely lead to larger deductibles, Congress should raise the contribution limit of health savings accounts to the maximum out-of-pocket allowances under the Affordable Care Act. This will help some people purchasing their own insurance afford their out-of-pocket costs.

The Senate’s first attempt at repeal and replace failed. Straight repeal failed. Now the Senate Republicans’ are pressing for “skinny repeal” – and idea that most people on Capitol Hill don’t even know yet what it entails. It is doubtful that “skinny repeal” will even pass the House of Representatives. The final attempt at “Skinny Repeal” got the thumbs down from the Senate. And now, Graham-Cassidy has fizzled.

So instead, Congress should consider these fixes for Obamacare; fixes which will strengthen the market, maintain the goal of improving coverage for all Americans, and have the best chance to receive bipartisan support.

This post was updated July 29, 2017. And again on September 27, 2017.